Liberty MavenCorrect thinking about housing prices
February 25th, 2009 11:57 pm | by Mike Miller | Published in Bailouts, Banking, Big Government, Debt, DownsizeDC.org, Economics, Free Market, government spending, Individual Responsibility, Liberty, Market Regulation, Money, national debt, Obama, Politics, Socialism, Taxes | 8 Responses
D o w n s i z e r – D i s p a t c h
Quote of the Day: “The whole reason we have elected officials is so we don’t have to think all the time.” — Homer Simpson
Yesterday we called falling home prices “good news” because they’re helping to clear the housing glut. Some may quarrel with this — especially if they’ve watched their home value plummet. Our praise for falling real estate prices deserves more comment . . .
Two responsible DC Downsizers are affected differently by the housing market.
* One member of our Downsize DC Team has an “upside down mortgage.” He continues to pay it. He wants an end to the crisis. He views falling home prices as the precondition for rising value — sooner, rather than later. He also recognizes that Federal Reserve monetary policy is to blame for his situation.
* Another member of our Downsize DC Team has been saving to buy a home for a long time. He recognized that there was a housing bubble, and looked forward to the day when home prices would fall to realistic levels. He “hopes” to buy a home soon.
Both of these responsible men view real, free market prices as essential to their personal financial aspirations.
* The upside down mortgage holder sees the elimination of the current housing surplus as the way to higher values. Clear the excess and marginal home sales will start to occur at slightly higher prices. This is the only way the upside down mortgage can ever become right side up.
* The hopeful homeowner wants to pay the true value, not the bubble price created by the Federal Reserve and various government housing policies. The proposed government housing bailout will deny this DC Downsizer the ability to buy a home at a real market price.
Do you really think politicians can make this better?
* Politicians lack power to help the upside down mortgage holder. The federal government couldn’t possibly borrow enough money to cover all the losses. Even the token attempts proposed by President Obama to stop foreclosures robs money from other people and other parts of the economy. This DC Downsizer’s only hope is that the housing glut will be allowed to clear, sooner rather than later.
* The hopeful home buyer is being robbed of the best opportunity to fulfill his dream by the politicians’ desire to rescue people who bought more housing than they could safely afford. This person’s prudence is being punished in order to reward the imprudence of others.
We reassert our claim: falling home prices are good news. Those who embrace liberty and reality understand . . .
“Government is the great fiction through which everybody endeavors to live at the expense of everybody else” (Frederic Bastiat).
* Should the upside-down homeowner who continues to pay his mortgage, bail out those who were irresponsible?
* Should the prudent man forgo his dream of home ownership right when it’s becoming a possibility, to help someone keep a house with an extra bedroom and bathroom they couldn’t afford?
Blame “predatory lenders” if you wish, but it’s hard to cheat the prudent. The irresponsible few over-extended themselves. The vast majority of Americans behaved responsibly and continued to pay their bills.
* The housing bailout threatens to harm the responsible majority for the benefit of the irresponsible minority.
* The housing bailout is UNFAIR to those who continue to pay their mortgage.
Let’s go further. From Fannie Mae/Freddie Mac, to the Community Reinvestment Act, and so on, the politicians said affordable housing was a worthy political goal. Now, housing is becoming affordable, and they want to stop it?
The market process must be allowed to continue, unfettered. The housing bailout is bad news!
Despite both the injustice and economic stupidity of it, Congress plans to vote on the housing bailout tomorrow (Thursday). Today is probably the last day to express your disapproval.
We regret that we failed to provide the action link in yesterday’s Dispatch. We are correcting that oversight here. Please use our simple Educate the Powerful System to send Congress a message opposing this bad bill.
Use your personal comments to tell Congress that the bailout bill would reward the irresponsible minority while punishing Americans who have behaved prudently.
Jim Babka
President
DownsizeDC.org, Inc.
D o w n s i z e r – D i s p a t c h
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February 27th, 2009 at 1:48 am (#)
Dear President Obama,
HI!, yoo-hoo, over here, we are 100,000,000 men, women and children who rent and we seem to be invisible to you and the media (including NPR, New York Times and the Wall Street Journal) but clearly our numbers make us important. We are wondering why you are helping 9 million people at the expense of me and my 99,999,999 friends, neighbors and fellow countrymen. Not to mention the additional millions of former homeowners who will soon join us because they rationally decided to live within their means and rent.
But how is your plan hurting 100,000,000 renters? It is hurting them in three major ways:
1. By putting a floor (and debatable how stable or realistic that floor is) under housing prices above what they were before the bubble began you are continuing to price renters out of the market.
2. By raising the deficit you are going to be putting some of the tax burden on renters (yes some will go to homeowners as well).
3. Because many former owner-occupied properties have turned into rentals rental prices are actually falling. By keeping people in houses they can?t afford you will, in effect, raise rents again.
The net result is that you are charging renters, through the eventual taxes needed to pay for this, for the privilege of NOT being able to afford a house while also raising their current rents. This reminds me of the former Soviet practice of making soon-to-be-victims of execution pay for their own bullets and then charging their families for their burials.
Read more here
http://watchingmarcitz.com/2009/02/22/obama-hurts-100-million-to-help-9-million/
July 27th, 2009 at 1:09 pm (#)
The current bailout plan the Obama administration has somehow contribute in lessening the effects of economic global crisis to everyone. Maybe in due time, the economy will bounce back to where it should be.
July 27th, 2009 at 1:09 pm (#)
The current bailout plan the Obama administration has somehow contribute in lessening the effects of economic global crisis to everyone. Maybe in due time, the economy will bounce back to where it should be.
July 27th, 2009 at 1:09 pm (#)
The current bailout plan the Obama administration has somehow contribute in lessening the effects of economic global crisis to everyone. Maybe in due time, the economy will bounce back to where it should be.
July 27th, 2009 at 1:09 pm (#)
The current bailout plan the Obama administration has somehow contribute in lessening the effects of economic global crisis to everyone. Maybe in due time, the economy will bounce back to where it should be.
July 27th, 2009 at 1:09 pm (#)
The current bailout plan the Obama administration has somehow contribute in lessening the effects of economic global crisis to everyone. Maybe in due time, the economy will bounce back to where it should be.
July 27th, 2009 at 1:09 pm (#)
The current bailout plan the Obama administration has somehow contribute in lessening the effects of economic global crisis to everyone. Maybe in due time, the economy will bounce back to where it should be.
July 27th, 2009 at 1:47 pm (#)
Yes, Obama's actions will have an effect on the movement of the economy, and there's no doubt the economy will return to "where it should be" but that direction is not "up", I promise you.